TIDMPTSB TIDM52ZQ
RNS Number : 9833X
Permanent TSB Group Holdings PLC
02 May 2023
2 May 2023
Permanent TSB Group Holdings plc ('the Bank')
Interim Management Statement - Q1 2023 Update
Comment by Eamonn Crowley, Chief Executive:
'The Bank reports a strong business and financial performance in
the first quarter of the year. New lending volumes and
transactional banking income have increased year-on-year, driven by
the competitive market and a larger customer base. We also have a
strong pipeline of activity across all of our key product lines.
Although the global macroeconomic environment remains uncertain,
the Irish economy continues to out-perform in terms of growth and
employment levels.
In quarter one, we successfully completed the acquisition of 25
Ulster Bank Branches and c. 3,200 Ulster Bank SME loan accounts,
valued at c. EUR165 million. This migration marked another
significant step for us in the transformative transaction with
Ulster Bank, and has allowed us to further expand our business
offering and build valuable customer relationships. We look forward
to completing the migration of Ulster Bank assets in the coming
months, with the remaining non-tracker mortgage portfolio and the
Lombard asset finance business due to migrate shortly.
Expanding our branch network to 98 branches nationwide, coupled
with our EUR150 million multi-year investment in digital services
is evidence of our commitment to deliver the best combination of
all our channels - from Branch to App to Voice to Intermediaries -
to support our customers' individual needs.'
Key Points:
-- The Bank maintains a strong capital position; fully loaded
CET1 capital ratio of 15.2%; regulatory CET1 capital ratio
15.5%
-- New business mortgage market share of 25% [1] (versus 17% at March 2022)
-- Total Operating Income 77% higher year-on-year (YoY)
-- Net Interest Margin (NIM) of 2.26%, 82 bps higher than the
Q1'22 NIM of 1.44% and 34bps higher than the Q4'22 NIM of
1.92%.
-- Operating costs of EUR98 million, 18% higher YoY, in line with management expectations
-- Customer deposits of EUR22.3 billion, an increase of c.3% (c.
EUR0.5 billion) since December 2022
-- Non-performing loans (NPLs) of EUR0.7 billion and the NPL
ratio of 3.3% at March 2023 are in line with December 2022
-- Successfully issued EUR650m MREL eligible senior debt in
April 2023; order book was larger than any previous issuance and 3x
over-subscribed
Business Performance
Q1 2023 was another positive quarter for the Bank with new
mortgage lending of EUR721 million, growth of 69% year-on-year,
while the mortgage market grew 14%. This growth is supported by the
strength in our mortgage proposition and the high proportion of
Mortgage Switchers seen in the market in H2'22 and the early part
of 2023 as customers sought rate certainty. Market share of
mortgage drawdowns grew to 25% which was 8 ppts higher than the
March 2022 market share (17%). However, it should be noted that the
Mortgage Switcher portion of the mortgage market is expected to
reduce over the remainder of the year which will lead to lower
year-on-year growth in new lending than that observed in Q1 2023.
The mortgage market in Ireland is estimated to grow c. 3% from
EUR14.1 billion in 2022 to c. EUR14.5 billion [2] in 2023.
Income
Net interest income is up 86% year-on-year; with gross interest
income 95% higher year-on-year due to organic loan book growth, the
migration of Ulster Bank Mortgage and SME Assets and the changed
interest rate environment. The net interest margin of 2.26% is
82bps favourable year-on-year; benefitting from the changed
interest rate environment and increased loan book volumes. Fees and
commission income performance is strong, 12% higher when compared
to the prior year, due to increased transactional activity from a
higher customer base.
Costs
In line with management expectations, Operating Expenses are
trending c.18% higher than prior year. The Bank continues to
maintain tight control over the administrative cost base; key
investment programmes, the acquisition of the Ulster Bank
portfolios, and inflationary pressures have caused this upward
trend.
Balance Sheet
Customer deposits of EUR22.3 billion at 31 March 2023 are EUR0.5
billion higher than 31 December 2022, primarily due to a c. 4%
increase in current account balances to EUR9.3 billion.
Approximately 70% of the Bank's total customer deposits at 31 March
2023 are covered under the Deposit Guarantee Scheme ('DGS'), in
line with balances at 31 December 2022. The loan to deposit ratio
of 89% and liquidity coverage ratio of 192% at the end of March
2023 provides the Bank with a strong liquidity position and a
secure funding source for future growth in lending volumes.
The total performing loan book of EUR19.5 billion at 31 March
2023 is c. EUR0.3 billion higher than the total performing loan
book at 31 December 2022, as a result of the Ulster Bank Micro-SME
migration in February 2023, and new mortgage lending year-to-date
exceeding repayments and redemptions. Asset Quality remains strong
with Non-Performing Loans of EUR0.7 billion at 31 March 2023, in
line with balances at 31 December 2022. While the global
macroeconomic environment remains volatile, the Irish economy
continues to record strong growth levels with no notable
deterioration in the asset quality of the Bank's loan book evident
to date.
With a weighted average LTV of c. 51% at March 2023 on the core
performing loan book of residential mortgages and no material
exposure to Commercial Real Estate, the Bank's Balance Sheet is
well positioned and will strengthen further as we complete the
migrations of the remaining Ulster Bank assets and deliver on our
strategic initiatives to grow customer and new lending volumes.
Capital
Capital Ratios (%) March December
2023 2022
CET1 (Fully Loaded) 15.2% 15.2%
------ ---------
CET1 (Transitional) 15.5% 16.2%
------ ---------
Total Capital (Fully
Loaded) 21.3% 21.3%
------ ---------
Total Capital (Transitional) 21.6% 22.3%
------ ---------
Leverage Ratio (Fully
Loaded) [3] 7.5% 7.7%
------ ---------
The Bank's Common Equity Tier 1 (CET1) ratio on a fully loaded
basis remains strong at 15.2% at 31 March 2023, unchanged when
compared with the CET1 ratio on fully loaded basis at 31 December
2022.
The CET1 ratio on a transitional basis of 15.5% at 31 March 2023
reduced by 70 bps, primarily driven by annual transitional phase in
of prudential filters, compared to the CET1 ratio on a transitional
basis of 16.2% at 31 December 2022. The minimum regulatory
requirement for CET1 on a transitional basis is currently 8.94% [4]
.
The Total Capital ratio on a transitional basis was 21.6% at 31
March 2023; regulatory requirement for Total Capital on a
transitional basis is currently 13.95%.
The Bank's Leverage ratio on a fully loaded basis at 31 March
2022 was 7.5%; one of the highest amongst European banks.
2023 Outlook
Aided by a positive domestic macroeconomic backdrop, the Bank is
in a strong position to continue to support our customers, the
Irish economy and our shareholders. The scale and pace of any
further interest rate increases by the European Central Bank remain
unclear and, as such, the guidance for FY23 remains in line with
prior market communications. The Bank will provide updated guidance
for the remainder of the year at its HY23 Interim Results.
Total Income of c. EUR650 million will be c. 60% higher
year-on-year while we maintain cost discipline, reducing the Cost
Income Ratio to below 70% in 2023.
Asset quality continues to perform well and, as such, the
previously communicated guidance for a cost of risk of <10bps
remains.
Capital remains strong and, having assessed a range of
scenarios, the CET1 ratio will remain above the Bank's minimum
regulatory requirements.
- Ends -
For Further Information Please Contact:
Denis McGoldrick Leontia Fannin
Investor Relations Manager Head of Corporate Affairs and Communications
Email: denis.mcgoldrick@permanenttsb.ie Email: Leontia.Fannin@Permanenttsb.ie
Phone: +353 87 928 5645 Phone: +353 87 973 3143
Note on Forward-Looking Information:
This announcement contains forward-looking statements, which are
subject to risks and uncertainties because they relate to
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends, and similar expressions concerning
matters that are not historical facts. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual results, performance or
achievements of the Bank or the industry in which it operates, to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. The forward-looking statements referred to in this
paragraph speak only as at the date of this announcement. The Bank
undertakes no obligation to release publicly any revision or
updates to these forward-looking statements to reflect future
events, circumstances, unanticipated events, new information or
otherwise except as required by law or by any appropriate
regulatory authority.
[1] Based on BPFI data as at 31 March 2023
[2] Source: Davy
[3] The Leverage ratio is calculated by dividing Tier 1 capital
by gross balance sheet exposures (total assets and off balance
sheet exposures).
[4] Regulatory requirements for both CET1 and Total Capital on a
transitional basis excludes P2G
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